From next year, derivative products based on the Korea index can be listed on overseas exchanges. The Korea Exchange has decided to gradually allow the listing of derivative products based on the Korea index on overseas exchanges to enhance accessibility for global investors to the Korean capital market.
On the 26th of this month, the Korea Exchange signed a memorandum of understanding (MOU) with major overseas index providers Morgan Stanley Capital International (MSCI) and Financial Times Stock Exchange (FTSE) Russell. The exchange noted that after further discussions and the signing of a formal contract, related derivative products are expected to be listed on overseas derivative exchanges starting in June next year.
The Korea index refers to an index created by utilizing or processing market data operated by the exchange, which consists of over 80% of the market capitalization of stocks listed on the exchange. Previously, the exchange did not allow the listing of derivative products based on the Korea index calculated by overseas index providers, considering the negative impacts such as liquidity outflows in the domestic derivative market.
However, as overseas index providers have consistently pointed out that improving accessibility to Korea index derivative products is necessary for the Korean securities market to be recognized as a developed market, a decision was made to improve this situation.
The exchange plans to conclude a formal contract in March next year, which will include specific conditions such as the underlying index to be used for the listing of derivative products and the selection of overseas exchanges where the products will be listed. It aims to list derivative products based on the Korea index on overseas exchanges in the second half of next year. In 2026, the trading regions and times for derivative products based on the Korea index are expected to be expanded.
An exchange official said, "Global investors will be able to manage risks related to the Korean market without being constrained by time and location," and added, "The perception of the previously closed-off Korean market is expected to improve, and various linked products are anticipated to be launched overseas, contributing to the expansion of liquidity in the domestic stock market."